Thursday, July 6, 2017

Hong Kong – One Nation, Two Systems?

When I was a boy, the step-son of a U.S. career diplomat, I remember standing on the Crown (U.K.) Colony of Hong Kong/People’s Republic of China border (in HK’s New Territories), looking through the heavily fortified border fence, past the green-jacketed PRC soldiers, at a duck farm with a fishing village in the background. Other than refugees risking their lives to cross into HK, there was little or no cross-border movement at all. Even water had to be generated within HK, mostly by collecting rain water in cisterns on rooftops and severe rationing. Yet Hong Kong was modern, vibrant and rich. China was struggling with a failed “Great Leap Forward” program and not quite set on the path of self-destruction that the Cultural Revolution would bring a few years later. Poor. Drab. Bleak.

Today, those duck farms and fishing villages have long since become the PRC Special Administrative Region, Shenzhen, an ultra-modern city that is even larger than Hong Kong. Not too long after the death of Mao Zedong in 1976, Deng Xiaoping assumed the political reins in China. As Communism in what was once the Soviet Union and its Eastern European bloc struggled and lost a battle against nascent democracy, Chairman Deng balanced what he believed was a necessary repression to save the state (remember Tiananmen Square in 1989) with the task of undoing the damage of that Cultural Revolution and pulling China into the 20thcentury. “Some must rich first” opened the door to modern economics laced with “capitalism, PRC style” or more appropriately, “communism with Chinese characteristics.” China’s economic power absolutely exploded, making her the second largest economy on earth, destined eventually to step into first place.

In 1984, Britain and China negotiated a “handover” of Britain’s Crown Colony to China based upon a PRC treaty-pledge to keep HK democratic independence, its legal system, intact for fifty years. One nation, two systems. Hong Kong remained one of the three major financial capitals of the earth, along with New York and London. The system seemed to work reasonably well, although money-driven HK billionaires and businesses seemed to kowtow to Beijing, ingratiating themselves to better bargaining positions within China’s accelerating economy. A democratic legal system seemed to be less important to them than clear and beneficial access to China’s markets. But lots of HK citizens felt otherwise, and protests became common.

As China grew, Hong Kong’s relevance subsided. “Hong Kong was the world’s busiest container port from 1992 to 2004, butnow stands in fifth place. Singapore led the rankings from 2005 until 2010, when it was overtaken by Shanghai.” South China Morning Post, February 25th. HK’s port traffic has declined by 9.7% as other PRC cities surge past (Shanghai as noted above, but now adding several addition ports. E.g., Shenzhen now generates more shipping traffic than HK).

But in 2013, an even bigger change slammed into Hong Kong and its independent economic supremacy: the rise of Xi Jinping as the new leader of China. No leader since Mao himself had asserted such a powerful, personal and charismatic figure. President Xi was bound to assert China as the regional Asian superpower and as the master of all of its national territory, regardless of treaties or commitments to the contrary. China carefully orchestrated that only a strongly pro-Beijing (one China, one system) could be elected to run this former British colony.

Hong Kong’s political leadership had been fractious for some time, unable to deal with necessary infrastructure upgrades and repairs and leaving the giant elephant in the room – the massive lack of affordable housing – without any serious effort toward solution. Now HK seems paralyzed, destined to fade further as China’s infrastructure and economic power only seems to push HK deeper into the shadows.

President Xi just left Hong Kong after a trip intended to celebrate the 20thanniversary of the takeover and the installation of a new, strongly pro-Beijing territorial chief executive under a PRC mandate that would prevent any pro-democracy leader from achieving office. With an unsubtle PRC parade of military might (pictured above), President Xi underscored how much HK was now just one more part of China.

“President Xi Jinping’s trip, to coincide with the 20th anniversary of the former British colony’s return to China, sent a pointed signal to the world that Beijing won’t tolerate challenges to its control — whether at home or abroad.

“‘Any attempt to endanger China’s sovereignty and security, challenge the power of the central government ... or use Hong Kong to carry out infiltration and sabotage against the mainland, is an act that crosses the red line,’ Xi said after presiding over the inauguration of Carrie Lam, the territory’s new chief executive… He cautioned against ‘making everything political or deliberately creating differences’ that could cost the territory its success as Asia’s financial hub.

“Xi’s visit, his first to the territory as president, comes as Hong Kong is grappling with deep political divides, unmanageable property prices, a widening income gap and a frustrated young population with few options to advance.

“Hundreds of thousands of people took part in a months-long street protest in 2014 for the right to elect their own leader. The so-called Umbrella Movement failed to win concessions, but it gave rise to a small pro-independence push that has ruffled Beijing.

“China agreed to give Hong Kong limited autonomy for five decades after the handover, granting it rare freedoms such as an independent judicial system and uncensored media. Officials labeled the formula ‘one country, two systems.’

“But Xi’s government has pushed against those boundaries. Five booksellers who sold salacious material about China’s leaders disappeared in 2015 — then resurfaced in custody on the mainland. In January, secret police abducted a well-connected Chinese billionaire from his bed at Hong Kong’s Four Seasons Hotel… China’s parliament has issued unprecedented interventions in the territory’s legal system. Despite a lack of public support, Lam was elected by a small group of largely pro-Beijing elites.” Los Angeles Times, July 2nd.

We can expect President Xi to remain a tough and focused leader, pushing Hong Kong into the “one system” fold that defines the rest of China well-before the expiration of the five decade pledge of honoring HK’s independence. Many thought that Hong Kong would push China into a political reality that mirrors HK… but the reality is that China pulling HK into its own political reality. Will Hong Kong continue slipping down China’s power-cities list or will I reignite based on its powerful independent, democratic capitalist system? Time will tell.

I’m Peter Dekom, and as we struggle with our own internal dissention, we often overlook powerful political battles in distant lands that do not seem as if they will impact us… even if that assumption is so critically false.

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Peter's Bio

Peter J. Dekom practices law in Los Angeles and was formerly "of counsel" with Weissmann Wolff Bergman Coleman Grodin & Evall and a partner in the firm of Bloom, Dekom, Hergott and Cook. Mr. Dekom's clients include or have included such Hollywood notables as George Lucas, Paul Haggis, Keenen Ivory Wayans, John Travolta, Ron Howard, Rob Reiner, Andy Davis, Robert Towne and Larry Gordon among many others, as well as corporate clients such as Sears, Roebuck and Co., Pacific Telesis and Japan Victor Corporation (JVC). He has been listed in Forbes among the top 100 lawyers in the United States and in Premiere Magazine as one of the 50 most powerful people in Hollywood .

Mr. Dekom has been a management/marketing consultant, and entrepreneur in the fields of entertainment, Internet, and telecommunications. As a consultant to the state of New Mexico for almost a decade, he was instrumental in creating, writing and implementing legislation to encourage film and television production in the state and supervised the film loan program portion of that incentive structure until the spring of 2011. Mr. Dekom has also provided off-balance sheet, insurance-backed financing for major motion picture studios.

Mr. Dekom served on the board of directors of Imagine Films Entertainment while the company remained publicly traded and was a board member of Will Vinton Studios and Cinebase Software, among others, leaving upon change of ownership. He has also served as a member of the Academy of Television Arts and Sciences and Academy Foundation, Board of Directors, Chairman (now Emeritus) of the American Cinematheque, and on the Advisory Board of the Shanghai International Film Festival. He recently served on the Board of Governors for the America Bar Assn.’s Sports and Entertainment Law Section, where he often authored articles, delivered lectures and continues to be an active participant.

The Beverly Hills Bar Association honored Mr. Dekom as Entertainment Lawyer of the Year in 1994, the Century City Bar Association accorded him the same honor in 2004, and the Family Assistance Program named him Man of the Year in 1992 for his work with the homeless. In 2012, the American Bar Association, through its Forum on Sports and Entertainment Law, honored Mr. Dekom with its highest recognition for entertainment lawyers, the Ed Rubin Service Award. Author of dozens of scholarly articles, Mr. Dekom also is the co-author of Not on My Watch; Hollywood vs. the Future (New Millennium Publishing, 2003) with Peter Sealey and author of Next: Reinventing Media, Marketing and Entertainment (HekaRose Publishing Group 2014). He has served as an adjunct professor in the UCLA Film School, a lecturer (entertainment marketing) at the University of California, Berkeley Haas School of Business as well as being a featured speaker at film festivals, corporations, universities and bar associations all over the world.

Mr. Dekom graduated from Yale in 1968 (BA), and graduated first in his class in 1973 from the UCLA School of Law (JD). He is married to Kelley Choate, an MBA and former art gallery-owner who evolved into a renowned micro-collage artist in her own right. He also has a son, Christopher (b. 1983), who is a Duke University graduate, a Chartered Financial Analyst, a 2013 Darden (UVa) MBA graduate, and is currently an executive with a Los Angeles-based media and entertainment company. Chris' wife, Stephanie (a 2013 George Washington University MD grad), is a neonatal pediatrics 'fellow' at a major Los Angeles hospital